Your company is evaluating a new factory that will cost $14 million to build. Your target debt-equity ratio is 1. The flotation cost for new equity is 7% and the flotation cost for new debt is 4%. The company is planning to use retained earnings for 50% of the equity financing. What are the weighted average flotation costs as a fraction of the amount invested? What are the flotation costs (in $ million )?

Please answer the following showing detailed working: Bruce & Co. expects its EBIT to be $100,000 every year forever. The firm can borrow at 11 percent. Bruce currently has no debt, and its cost of equity is 18 percent. The tax rate is 31 percent. Given the above information; a) Complete the table given below for varying levels of debt below by using a mix of the given information and using your own computations. EBIT $100,000.00       Cost of debts 11%       cost of equity when unlevered 18%       Tax rate 31%       Debts $0 $10,000.00 $20,000.00 $30,000.00 Cost of Equity when levered         Equity         D/E         Vu         VL         WACC         b) Plot the results from the table into the following two graphs:i) Value of the firm vis-à-vis- Total debtii) Cost of capital of the firm vis-à-vis D/E ratio.iii) Which MM propositions have you demonstrated?

Company T has a debt-to-equity ratio of 0.50. The company is considering a project that will require an initial investment of $54 million. The company's chief financial officer believes that all the investment needed will have to be raised externally. The flotation cost when issuing new equity is estimated to be 6.5% while the cost of issuing new debt is 2.6%. (1) What is the weighted average flotation cost percentage, and (2) by how much does it increase the amount that needs to be raised in order to cover the flotation costs?

) You are asked to estimate the RAROC of a bank's $100 million loan business, 7.5% of which is the economic capital. The average interest rate is 8%. All the loans have the same default probability of 1.5% with a loss given default of 60%. Operating costs are $15 million, and the funding cost of the business is $30 million. The economic capital is invested and earns 6%.

The cost of capital is 15%, the before-tax cost of debt is 9%, and the mar-ginal income tax rate is 40%. The market value of debt is $50 million and the market value of equity is $50 million. What is the cost of equity?

CCR Incorporated is considering a new project. The company has a debt-equity ratio of .62. The company’s cost of equity is 11.8%, and the after tax cost of debt is 4.9%. What is the WACC for CCR?

You are considering a project which requires $250,000 in external financing. The flotation cost of equity is 7% and the flotation cost of debt is 2.5%. You wish to maintain a debt-equity ratio of 0.55. What is the initial cost of the project including the flotation costs? a. $235,720 b. $263,508 c. $264,280 d. $254,752 e. $255,784

A company requires $500,000 in assets and will be 100% equity financed. If the Earnings Before Interest and Taxes (EBIT) is $45,000 and the tax rate is 30%, what is the Return on Equity (ROE)?

You are given the following information concerning a firm:Assets required for operation: $5,100,000Revenues: $8,400,000Operating expenses: $7,850,000Income tax rate: 40%. Management faces three possible combinations of financing: 100% equity financing 30% debt financing with a 8% interest rate 60% debt financing with a 8% interest rate   What is the net income for each combination of debt and equity financing? Round your answers to the nearest dollar.     1 2 3 Net income $     $     $       What is the return on equity for each combination of debt and equity financing? Round your answers to one decimal place.     1 2 3 Return on equity   %     %     %     If the interest rate had been 16 percent instead of 8 percent, what would be the return on equity for each combination of debt and equity financing? Round your answers to one decimal place.     1 2 3 Return on equity   %     %     %     What is the implication of the use of financial leverage…

A firm that is currently unlevered has WACC = rS = 10%/year. This company plans to do a recapitalization by issuing debt and repurchasing equity. After the recapitalization, the debt-to-equity (D/E) ratio will be 0.5. If the cost of debt, rD, is 6%, what will be rS after the recapitalization?